What occurs in the case of an 'anticipatory breach' in contract law?

In the context of contract law, anticipatory breach occurs when one party communicates, either through words or actions, their intention not to fulfill their contractual obligations before the performance is due. This declaration allows the non-breaching party to take action in response, which may include seeking damages or considering the contract terminated.

The importance of recognizing anticipatory breach lies in its implications for the non-breaching party, who may not have to wait until the actual performance date to take legal action for a breach. This proactive communication provides clarity on the parties' positions and can facilitate early resolution of the contractual dispute. In contrast, the other options do not accurately depict this concept, as they describe different scenarios that do not involve a clear refusal to perform as anticipated under the contract.